Single article law for a chance to transfer OT’s investments through Mongolia
Bill on encouraging private entities to open account at the BoM drafted
2 долоо хоног, 2 өдөр өмнө
The Bank of Mongolia (BoM) is making an effort to encourage private entities contributing to Mongolia’s economy and are able to bring in high-volume foreign currencies to open accounts at the BoM. During the recent Parliamentary Standing Committee on Economy meeting, the BoM presented actions organized within the frames of 2017 Guidelines on Monetary Policy, in which a discussion was held on making the transactions of Oyu Tolgoi deposit revenue through Mongolia. Bayartsaikhan Nadmid, the Governor of the BoM, explained that high-income private companies, including Oyu Tolgoi, will be encouraged to open accounts at the BoM if the bill is approved. He remarked, “As an intermediary organization, every other Central Banks only speak to commercial banks and the Government. No central banks deal with private entities. However, considering Mongolia’s aspect and current situations, the BoM has drafted a bill on opening deposit accounts of high-income private entities at the BoM.” He added that the bill consisted of only one article and is expected to be discussed by the Parliament soon. The standing committee also picked up on foreign currency reserves. Currently, the BoM’s fx reserves equal eight-months of import. Last year, a total of USD 546 million was accumulated from donor countries under the IMF program. Also, the swap agreement with the People’s Republic of China was extended until 2020, and the bank purchased 20.3 tons of gold under the “Gold” campaign. As a result, the BoM strengthened its fx reserves to USD 740 million. The bank informed that it plans to increase gold purchase. MP Javkhlan Bold highlighted that the gold refinery remains an issue for Mongolia. Up until now, Mongolia refined its gold in Russian Federation, the U.K, and recently, in Switzerland. Refining of an ounce of gold currently costs USD 1.3, including transportation, storage, insurance and refining. The Governor of BoM expressed that the bank will further support initiatives to establish a gold refinery. He highlighted it will take at least five-years of constant operations for a gold refinery to receive an international certificate as the London Metal Exchange only purchases high-grade gold from central banks. This means that the bank will still have to refine its gold for another five years. According to Mr. Bayartsaikhan Nadmid, another option is to establish a branch of a refinery that has the certificate. He noted that there are over 20 companies, which hold the certificate globally.